Chain Reaction - Issue 27 - 18th May 2022
Updated: May 20, 2022
Welcome to this 27th issue of the Chain Reaction newsletter published on the 18th May 2022.
What you can expect in this newsletter
In the News
What we're reading/watching
Editor's Note (from Captain DeFi)
Education, Education, Education. The UST/Luna issue just goes to show how easy it can be to miss the telltale signs of potential issues in what was meant to be a trustworthy, low risk part of the crypto market, stablecoins. We discussed this in a recent Twitter Spaces you can re-listen to this along with reading some highlights from it on this thread here: https://twitter.com/AusDeFi/status/1524680817083297792
Additionally, Numbers and I made it up to Brisbane to witness and record some indigenous artworks with Alisha Geary from Provvy (an NFT marketplace and service) and we also got to do our first meetup in Brisbane along with the awesome folks at Mycelium. Brisbane was such a vibe and we had an amazing time meeting and greeting with the community. There’s more to come from both events but for now check out these links for some of what was up
Canvas to Token event (Brisbane) – https://twitter.com/AusDeFi/status/1526436512833085440
Aus DeFi / Mycelium Meetup (Brisbane) - https://twitter.com/AusDeFi/status/1526716579366731776
In other news, the Crypto Hub studios are coming along nicely with myself and C_Sincas in our group setting up more of the studio. You can see some shots below and we thank our sponsors Mercari for this. https://twitter.com/AusDeFi/status/1525720792713273344
This space moves so fast so who knows what adventures are on for next week but we hope you can come along for the ride and please do share with us your views on our community questions (in the Discord) as well as sharing any cool projects you are working on – we are keen to hear it!
In the news
The following comes from BetaShares weekly crypto focused newsletter - check it out in full over here for more data analysis and other insights: https://www.betashares.com.au/insights/bitcoin-backed-loans/
Also check out Justin's latest article on Livewire here: https://www.livewiremarkets.com/wires/prices-fall-but-conviction-grows
"Contagion from the woes of what was the third largest stablecoin, TerraUSD (UST), spread across the cryptocurrency market after losing its peg to the US Dollar, causing massive selloffs within the sector, and wiping almost $320 billion in market cap over the course of a week. UST is an algorithmic stablecoin pegged to US$1, which fell as much as 86% and has been unable to regain its peg.
Algorithmic stablecoins differ from collateral-backed stablecoins because they have no reserves; they hold their value based on an algorithm that automatically strikes a balance between the stablecoin and a partner coin, in this case Terra (LUNA). The system was designed to automatically maintain its peg to the US dollar, with the failure leading to a systematic devaluing of UST, while LUNA tokens began to be minted at an unprecedented rate. LUNA was a Top 20 coin and as of 6 May 2022, was trading above $80 with a market cap of $40B, however has now lost over 99.99% of its value, and is currently trading at less than 1 cent. The blockchain was temporarily halted, but has resumed trading on exchanges once again.
Although TerraUSD (UST) stablecoin failed to hold its peg citing a weakness in the structure, there has been a suggestion (unsubstantiated) that it was also subject to a targeted and coordinated short attack by institutional managers during an optimum time of weakness in the markets.2 On-chain analysis shows that two entities in a 24-hour period sold over $400 million of UST from the Anchor protocol which is the main yield protocol of the Terra ecosystem, causing a cascading liquidation effect into the whole ecosystem.
Australia finally listed three cryptocurrency ETFs late last week. Exposures to Bitcoin and Ethereum listed on the CBOE on Thursday, amidst the crypto market turmoil. Investor participation in the launch was lacklustre, with the three ETFs trading a total of ~A$2 million. Given how tough the year has been for growth assets, and given the current macro environment and cryptomarket volatility, the subdued launch did not come as a surprise."
This week we're showcasing the GiveTree, another climate change project, this time with a metaverse component. They recently made an announcement of a partnership with KPMG.
GiveTree is beyond excited to announce that we will be working with KPMG Australia as a part of their KPMG High Growth Ventures program. GiveTree will be joining some of Australia and the world's best and brightest web3 companies as we adventure forward into the Metaverse and beyond!
A huge thank you to all of the amazing people and organisations who have supported us along the way and helped us to achieve this amazing new milestone. Including Peter Xing Alyse Sue Fabio Carnevali Eric D'Esposito, Brad Woodland Amanda Price Kylie Little
We are excited to see GiveTree listed along side so many incredible many incredible companies such as Independent ReserveBinance @monochrome (especially given the fact GiveTree are pre-launch at the moment and planning on launching our first product in July 2022 and NFT launchpad)
We are also very excited to announce that we are working on a very exciting web3 event here in Sydney with groups such as: Fishburners, KPMG High Growth Ventures, Australian DeFi Association, NFTSYD, Haymarket HQ, web3academy And more! more to be announced soon!
This week we asked our community the following question:
How much do price movements effect your overall sentiment on the crypto markets
Here's some of the responses from our Discord
Bullish! I think more legal clarity will drive both adoption and inflow. Will make it more palatable to instos (their compliance dept) to enter the market as direct players
from ConcretePigeon | Jeremy
Bearish. First, web3 is a space with no borders and it moves fast. From a practical point of view I think that any centralised institution will have a hard time applying rules consistently across the entire space (if they can even keep up). It would also be tricky for multiple centralised institutions (that have jurisdiction over different physical locations) to align their views. Second, I want to believe that the web3 community will develop a way to self-regulate in a decentralised manner (like the vision for TCRs back in 2017-2019?). I think if we can do this it's a win for everyone.
from Mitch (Katalyst.Earth)
Bullish. We are building katalyst.earth in a grey zone and as much as we want to think we can work around the lack of regulations they will come. The sooner we can have clarity the better for the local web3 scene or we move to jurisdictions where there is clarity (Im speaking on our necessary tax, financial services and legal DD which we are still in the process of completing)
Data as at 17th May 2022 - XXXXpm
Market Moves (from CoinGecko)
NFT Moves (from CoinGecko)
What we've been watching/listening/reading
[Video] in this video, the Defiant hosts Mark Richardson and Mati Greeenspan to discuss what's been happening with the Terra ecosystem - https://medium.com/@jakedenny/the-lost-art-of-inventing-the-future-b95297426d31
[Podcasts] in this podcast, the Bankless crew go through the UST Luna downfall but also other news that may have been missed during the week such as Instagram getting into NFTs and more to the story circulating around Coinbase and its bankruptcy clause (e.g. it's not all bad). https://open.spotify.com/episode/4bMfhLxBUkW26GCBHkS2gJ
[Article] this piece from Jake Denny at Mycelium diving into some of the musings from famous inventors of yesteryear like Nikola Tesla - https://medium.com/@jakedenny/the-lost-art-of-inventing-the-future-b95297426d31
Get in touch
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If you would like to dig deeper into why and how is the blockchain relevant to international matters and to get more insights on regulations and Defi knowledge , join us on our Discord: https://discord.com/invite/ZRCTDdsVEF